Housing Market Hampers US Economic Recovery

The International Monetary Fund (IMF) recently announced that the economic recovery of the nation has been much better than expected. The organization cited “powerful and effective policy response” and improved financial conditions as the main reasons for the rebound. Threats of a double dip retraction in the housing market are posing the biggest obstacles for full restoration.
According to recent government and industry data the decline in the real estate market is wide spread and affecting nearly every region in the nation. The Washington Post reports “National Association of Realtors said Travelers Real Estate Investment Company an index that measures sales contracts signed on existing homes plunged 30 percent in May, more than twice what analysts had forecast, to the lowest level since the group started tracking the numbers in 2001.”
Despite the lowest mortgage rates offers on record since the 1950s, the housing market is still struggling. Sales in the real estate market have been heading for a downward spiral, especially since expiration of the government tax credit offer for first time homebuyers. Although a brief extension of the program just passed in both the House and by the Senate, the damage caused by the original April 1 expiration date has already been done.
High unemployment rates combined with a new wave of foreclosures are the negative factors preventing growth and progress in the industry. Until the U.S. jobless rate improves, American households may not have the financial means necessary to stimulate the struggling housing market. Currently, the jobless rate Target Audience For Luxury Real Estate stands at over 9 percent and although decreases are expected, the slide will not occur for several years. The IMF estimates that 2012 will mark the first major decrease in the current unemployment levels. At that time the rate will drop to 8.4 percent and decrease to 6.3 percent during the course of 2015.

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